Makis Keravnos declared to “K” that he will be surplus and developmental
By Panagiotis Rougalas
The Ministry of Finance is in the final stage of preparing the 2024 budget. The goal, in the last five days of September, to be submitted to the Council of Ministers for approval and then, as usual, to take the road from the Presidential Hill to the House of Representatives.
As the Minister of Finance, Mr. Makis Keravnos, stated to “K”, the 2024 budget is drawn up within the framework of the government's declared policy for fiscal discipline and is aimed at ensuring fiscal stability. He emphasized that it is developmental and particularly aimed at reducing the growth rate of employment in the public sector and increasing productivity. Asked about the government's goals to be achieved through the 2024 budget, Mr. Keravnos replied that the goal of the 2024 budget and the medium-term fiscal framework 2024-2026 is to address the challenges and stabilize the conditions for the sustainable development of the economy. Asked to give some of its characteristics, he indicated that it will be in surplus and will aim to reduce the public debt in the medium term, while satisfying the fiscal frameworks set by the European Commission.
When asked if measures have been taken to reduce the effects of accuracy and inflation, Mr. Keravnos explained that measures to minimize the effects of accuracy have been incorporated, however measures will be announced continuously based on needs and developments. At the same time, the minister added that integrated into the 2024 budget are measures and actions related to the Development and Resilience Plan that lead to green development and digitization. “The aim is to transform the above economy and society into a course of better prospects”, he concluded.
The upper limits of expenditure
According to the state budget 2024 and medium-term fiscal framework 2025-2026 included in the Strategic Fiscal Policy Framework 2024-2026 of the Ministry of Finance, the total spending ceiling for the central government is set at €9.38 billion for 2024, at 9 .48 billion euros for 2025 and to 9.42 billion euros for 2026. As the message has already been “sent”, during 2024 every effort should be made so that no new policy proposals are submitted to the Cabinet Council entailing additional budgetary costs. The submission of new proposals by the ministries/ministries/departments/independent agencies as contained in the Strategic Fiscal Policy Framework should be part of the budgeting process and within the established ceilings. “Only in exceptional and unforeseen cases will new proposals be considered after the approval of the budget, provided that the necessary appropriations will be covered by savings without varying the overall budget ceiling and by extension affecting the achievement of the budgetary objectives, with full analysis of the annual and mid-term costs that the proposal entails”, it is characteristically noted.
According to the main risks included in the Plan, these arise from the recent geopolitical developments in Ukraine, following the invasion by Russia. As the ministry reports, the strict sanctions imposed on Russia and Belarus by the EU, the US and the UK. have brought about direct and indirect effects on the European economy, including Cyprus. These effects include a significant increase in inflation, which erodes the real income of citizens. Also, the inclusion of legal and natural persons from Cyprus on the US and UK sanctions lists has affected the service sector in Cyprus. If this happens again, the blow may intensify.
According to the ministry, developments in the banking sector are still considered a potential source of risk mainly due to the still high (despite significant progress) rate of non-performing loans (NPLs). Given the invasion of Ukraine, the sanctions imposed impact on the real economy and the rise in key interest rates, an increase in NPLs cannot be ruled out. On the other hand, as he notes, significant steps are continuously being taken towards effectively reducing the level of NPLs, while the banking system is supported by a resilient capital position and excess liquidity. In addition, a potential risk is the burden on public finances by the National Health Service, mainly through the deficits of the National Health Insurance Fund, which can be covered by the state during its first five years of operation, whose work has been particularly burdened due to the pandemic.
Warns the Council
A few days earlier, the Fiscal Council of Cyprus made observations on the public finances of Cyprus. Among his suggestions, there is the immediate monitoring and measures to limit inelastic costs, as well as the immediate initiation of planning to improve productivity in the State, which should precede the mass recruitments that are planned. It also recommends the direct inclusion in the government's plans and estimates of the expenditures that have not been completed but for which plans or political commitments have been created. He made special reference to the immediate start of plans for the gradual treatment of the debt to the Social Insurance Fund, but also hinted at speeding up the implementation of the terms of the Development and Resilience Plan, which may be one of the keys in view of the expected slowdown of the economy.< /p> < iframe width='300px' height='500px' src='https://www.adstorebluebird.cy/api/banner/ServeBanner?zoneId=2734' frameborder='0' scrolling='no'>